No More Car Payment

[Dr. Shane]

Instead of buying a car on credit, save the money to buy one.

The average car payment is $380. Save that each month for one year and you will have $4,500 which will buy a good used car. Continue to save the $380 each month and after another year trade the used car you bought with the first $4,500 in, put the new money with it and get a better used car. Continue to do this each year and every year you will be able to buy a newer car.

Does that sound better than buying a car with a five or six year loan?

[Liz]

Sounds good, but life doesn't always work out that way.

[Dr. Shane]

We have to take control of our money. Money comes and goes and where it comes from and where it goes to is largely controlled by us.

Money problems tend to be a default setting in life. If we are not actively managing our money, we are most likely to have money problems. There are people that make $200K/year that have more money problems than people making $30K/year. The answer to money problems is not making more money but rather learning how to manage what we make. (I say that but must add, sometimes we do have to pick up a second job to dig ourselves out of debt. But once debt free we can quit the second job.)

If anyone here has money problems and want help, they should ask their pastor to ask their conference stewardship director to come and put on a weekend seminar. That is also a great way to reach out to the community.

[Liz]

Dave Ramsey has a program that he puts out for free for church's. He has a very Biblical approach to debt. We listen to him on the radio.

[Doug]

If you can't pay for it in cash, then you can't afford it.

[Liz]

I am really not going to argue this point too much. But no car dealership is going to give you what you paid for a used car in a trade in. They will be happy to take it off your hands, but you will be lucky to get tax, title and license for it. Instead of trading it in every year, drive it until you are putting into it what a yearly payment would be, all the while saving; then trade it in or hopefully you can buy new and use the clunker for tax, title and license.

[Dottie]

My mother always bought her car for cash, except for one. She bought old ones for a long time before she saved enough to buy a new one, but after that, until the very last one, which she bought at auction for cash, she bought them new. She got to pick exactly what color she wanted, which accessories, etc., which a used car buyer doesn't always get to do.

[Dr. Shane]

There certainly is more than one way to skin a cat. That is for sure.

One will never get for trade in what they paid for a used car. Of course not. If one is in the used car market, they would probably be wise to stay away from dealerships as well. Often times better deals can be made at used car lots. If I buy a used car for $4,500, take care of it, after a year I should be able to get $2,000 for it on trade in. Add to that $2,000 my newly saved $4,500 and I can now get a used car worth $6,500. A year later I trade that in and get $3,000 on the trade in, plus my newly saved $4,500 and now I am going to be driving a used car worth $7,500. The next year I trade that one in for $5,000, plus my newly saved $4,500 and I now drive a used car worth $9,500. And on, and on, and on, and on. That is one way to move up without going into debt. After six years one should be driving a used car worth about $15,000. There are a lot of nice used cars in that price range.

The other way is to buy the first car for $4,500 and drive it for six years. At the end of the six years one will have $27,000 to buy a new car. When paying cash one can get a lot more car. Then bump the savings up to $425/month. Drive the new car for another six years. At the end of that six years one will have $30,000 - which considering inflation should buy about the same amount of car.

[Dr. Shane]

Crown Financial Ministry and Dave Ramsey both have a lot of good stuff for managing money.

[fccool]

One of the reasons for not buying the car new is that it is one of the faster depreciating "durable goods". In fact, if you'd like to practice buying a new car... take 20% of what you are planning to pay for the car and flush it down the toilet.

As soon as you drive the new car off the lot it looses 20% of its value.

As a foreigner no bank would give me loans (luckily), so I pretty much had to save up and hunt for good deals... do my research. My first car was geo prism, which I bought for $500. It was pretty nice for first car and it took me through college . I even traveled from Ohio to my internships in Iowa and Illinois... and to my first job after college.

I sold that car for $400, and bought my next one for 3200, which I drive to this day without any problems. I've learned to change my own breaks and do minor fix ups, and thus far neither of these cost me much of money.

I was fortunate to graduate with $5200 in debt and paid it off fairly fast, but I know that the reality is much worse for many of the students... so I like to help out international students in any way that I can.

But, overall living without debt is not that difficult if you you approach life from lighter side. The less you are dependent on debt the better... there's no "super-wisdom" in that.

[phkrause]

I have a uncle in Germany that used to buy diesel mercedes benz's with at least 300,000 miles on them, rebuild them and than drive them for another 300,000 miles at least. And always paid cash.

pk

[olger]

If you can't pay for it in cash, then you can't afford it.

Amen

[olger]

Instead of buying a car on credit, save the money to buy one.

The average car payment is $380. Save that each month for one year and you will have $4,500 which will buy a good used car. Continue to save the $380 each month and after another year trade the used car you bought with the first $4,500 in, put the new money with it and get a better used car. Continue to do this each year and every year you will be able to buy a newer car.

Does that sound better than buying a car with a five or six year loan?

Excellent advice Shane. I have paid cash for every vehicle we own since 1986, including a 2004 diesel Jetta last week. That reminds me..

47.54 MPG on the ride home from Kansas City. !!

[Taylor]

Originally Posted By: Doug

If you can't pay for it in cash, then you can't afford it.

Amen

That would apply to everything except a house and private college education. Who has 100-400 thousand sitting around or who can make double rent payments to one's self and save up enough to pay for a house cash unless you live in an area where houses are very inexpensive and your job pays very well. Also SDA education is around $25,000 a year for a dorm student.

[Dr. Shane]

Quite honestly, Adventist education costs too much to finance. There are two things that are acceptable to finance. The first is housing. Here is the catch. We should only finance a house on a 15 year loan. If we can't afford a 15 year loan we can't afford the house. The second is education. Here is the catch. We shouldn't borrow more for education that we will make our first year out of school. That means Adventist education is out if we have to finance our entire educaation.

[olger]

"If we can't afford a 15 year loan we can't afford the house."

Truth.

og

[Taylor]

Quite honestly, Adventist education costs too much to finance. There are two things that are acceptable to finance. The first is housing. Here is the catch. We should only finance a house on a 15 year loan. If we can't afford a 15 year loan we can't afford the house. The second is education. Here is the catch. We shouldn't borrow more for education that we will make our first year out of school. That means Adventist education is out if we have to finance our entire educaation.

A Christian Education is worth a lot of sacrifice, however. Some majors, such as Theology, can't be legitimately obtained at another denomination's school as much of it would not be correct.

However, having said that, many credits can be obtained even online, at 25-100 dollars per credit for the basic classes, from community colleges. (Such as your math clases, English, computer literacy, history etc.). This makes the SDA college education more affordable. Also if a student is serious, and studies hard, there are a lot of scholarships available to them. There is also grant money for those who come from a great need. If they can live off campus that saves a lot as well. If they colporteur in the summers they can make an additional $5,000 for school (of course they could work something like construction etc)Adventist education is worth it and is doable. Many people are in debt a year's worth on credit cards, plus their car payment, plus their 30 year mortgage. I think we can be wise and not have credit card debt, and not have huge car payments or long mortgages. But to limit your college debt to say $30 or $40 thousand may be a bit limiting in getting a Christian Education. However, I do think it would be very possible to not exceed $40,000 in debt for a 4 year load, even if the cost is $24,000 a year. You can get around $6,000 in pell grants, work off another $3,000o on campus during the school year, make $5,000 in the summers, get a $2,000 scholarship for grades or need-based...which would leave less then $10,000 per year in debt. Some kids only rack up $7,000 or so a year, or less. Mom and Dad can usually help out $2,000 - $5,000 a year depending on their education, earnings, and number of children. Adventist Education is doable. And if the student doesn't have to live in the dorm, the cost is further reduced by around $4,000 a year, I think it is.

Just my 2 cents.

[Bravus]

My daughter is going to a secular university (the one I teach at, as it happens), and will only be paying about $4500 a year, and living at home. We've committed to pay for all of our children's education expenses, to help them start life debt-free. Cassie already bought her first car for cash. They will get Visa debit rather than credit cards when they reach 18, to start building a credit score for when they need to buy a house without having other loans or credit cards, and we'll try to help them with a house deposit too. We've learned through bitter experience, and want to help them avoid our mistakes. We also put them through public schools, which in their case was an excellent experience, and saved is probably several hundred thousand dollars over sending them to SDA schools.

[Bravus]

I realised that could sound like opposition to Taylor's post, and it wasn't meant to. I agree that Christian education is valuable for many people, and that it involves sacrifices and can be done without massive debt. My parents sacrificed a lot to put my siblings and me through Adventist schools. We just decided differently for our own children, and of course every decision has costs and benefits.

[Liz]

I agree with Bravus.

[fccool]

The problem with "Higher Education" is the rationalized overhead, which really should not be there. You end up paying for the courses, and for the buildings, and for the campus safety, and for the parking maintenance, and for the buildings maintenance... while you may or may not enjoy the benefits of what you are paying for.

I recommend education abroad. It's much cheaper, and you will learn a foreign language on top of that (not to mention ... see the world).

[olger]

There are many types of education. Some of them close more doors than they open. We have gotten to the place where we almost insist on college educations, and we do so at the loss of skilled trades.

The ability to work with one's hands is a receeding shorline in America, which explains why the Amish stepped into this vacuum first, and hispanics second. I know this as a business owner for 25-years.

Used to be a time when you could not graduate from one of our colleges unless you had an acquired skill of some sort. I believe that we should go back to those days.

og

[Bravus]

I agree. (Hey, this is getting to be a habit!)

There was a massive over-emphasis on getting everyone into university for the past couple of decades in Australia, and massive cuts to the trades training programs... and then suddenly we wake up and find that the major constraint on economic growth in this country is the lack of skilled tradespeople, exacerbated by a mining boom that means the few that we do have are all earning six figure salaries on the mines, leaving the cities bereft.

It's about balance - doing a trade is not for everyone, and university is not for everyone. We need more and better paths, and they need to receive 'parity of esteem' - those who leave school and take up a trade shouldn't be looked at as having 'dropped out'.

I also agree with Olger's other point: *everyone* should be able to do something practical with their hands. I worked my way through college in factories and lumberyards, and rebuilt engines and a variety of other things, and am confident to do most things around the house. Someone with a university degree who can't plant and tend a garden, fix a tap washer, clean the air filter of a lawnmower or whatever is, IMO, not properly educated.

[olger]

[Taylor]

There are many types of education. Some of them close more doors than they open. We have gotten to the place where we almost insist on college educations, and we do so at the loss of skilled trades.

The ability to work with one's hands is a receeding shorline in America, which explains why the Amish stepped into this vacuum first, and hispanics second. I know this as a business owner for 25-years.

Used to be a time when you could not graduate from one of our colleges unless you had an acquired skill of some sort. I believe that we should go back to those days.

og

I agree with you too on this. I just think SDA education is worth it, but before our kids finish school, we will be making sure they have some sort of trade or at least have worked a considerable amount with their hands. That is important in our book too.